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Interview
conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – August
6, 2012
CEOCFO:
Mr. Riss, would you tell us about Pervasip?
Mr. Riss: We are a video and VoIP
telephone company. We sell Voice over IP telephone services over any
broadband connection, including the 3G and 4G wireless networks and we also
sell video telephony. We have a sturdy desktop videophone that allows you to
call around the world to your family, friends or business associates with a
video call.
CEOCFO: Who is using your services
today?
Mr. Riss: We have both business and
individual users. We have some businesses that love our videophone so much
that they buy it and give it to their customers. They believe that the high
quality video calling gives them a competitive advantage when their
customers call them and see them. We agree with that concept. We believe
that we obtain more business when we use a video call. For example, when we
call another telephone company in South Africa, on a videophone, we feel
like we know them, but we have never met them in person. In addition to
business customers, we are attracting many individual users from our
recently launched worldwide calling App for your mobile phone. It is an
Android App. It allows you to make phone calls from your Android phone to 60
countries with our unlimited calling plan, which sells for a price of $29.95
per month. You can also purchase 500 minutes for $9.95 or buy a phone
number, voice mail box and per minute calling of only 2.9 cents a minute to
more than 60 countries. We also have very low rates to any country, which
you can buy from us on a prepaid basis. In addition, people have the
opportunity to download the App, try it for 60 minutes of free calling and
see if they like it.
CEOCFO: How does your service compare to
what else might be available currently?
Mr. Riss: There are other providers that
do what we do, such as Skype or Vonage, but we have several advantages. One
is that some of these Apps that you download to your mobile phone from other
companies, use your voice-plan minutes from your existing carrier when you
make an international call. They just carry your VoIP traffic to a special
gateway and forward it to the final destination. What we do is we run the
call over the data side of the cell phone network, so we do not use any of
your voice-plan minutes. We run over the 3G, 4G or Wi-Fi networks. We have
customers that only have a $15 per month data plan with AT&T, bought our $10
a month voice plan, and they received a free phone from AT&T for that $15
data plan, with a 2-year contract, so they are only paying $25 a month for
their smartphone service. For the $25 a month charge, they receive the data
plan plus 500 minutes of calling from Pervasip’s cell phone service, but we
do not kill you with overage charges. When I had my Verizon service, and I
went over my 700 minutes, they charged me $0.35 cents per minute. If you do
not buy our unlimited calling plan, and you exceed the number of minutes in
the plan, we charge you only 2.9 cents per minute for any overage. We are
getting some very satisfied customers who download our App and buy a data
only plan from their wireless carrier. Not surprisingly, some of these
people are tablet users. We can be downloaded to the iPhone, but it is a
two-step download, so it is more complicated than our Android App.
Therefore, we are marketing only to Android users right now. We see reports
of 850,000 new Android devices being activated every day. That is a
significant number of new users and creates a large addressable market for
our product. We believe Android will be on your TVs very soon and will
shortly thereafter take over your home. There will be a little camera on top
of those televisions so that people can download a video VoIP App for making
video calls from your flat screen television, using an Android operating
system.
CEOCFO: Are most people aware of
Pervasip and how do you get more people to know about you?
Mr. Riss: We have been under the radar
for quite awhile. It is only recently, with the launching of this App, and
perhaps by design, after a settlement with our lender, that we have been
seeking publicity. We had $13.9 million in debt through a hedge fund that
had funded us on nine occasions before it became illiquid. We are basically
paying them back $1.7 million over the course of this year. Our plan is to
eliminate all the debt from the hedge fund by the end of 2012. With that
plan in place, we think that we are in good position to go forward and
create tremendous value for the company. We are now drawing attention to the
company through on-line advertising, using Facebook ads, and we plan a large
campaign with Yahoo to drive users to our website. Our rates are very low,
compared to traditional wireless carriers, and our quality is superb. We are
signing up agent sites too, as we now have the ability to track sales from
each on-line agent through the use of a promo code.
CEOCFO: What are the barriers to entry
for potential competitors?
Mr. Riss: The significant barrier is
time. We have been creating our VoIP platform for seven years, and it would
take someone with money at least 2 years to duplicate the flexible and
scalable platform that we have created. We have a cluster of servers on a
server farm processing our VoIP. Some of our competitors have done this, but
it is very complicated because there is a great deal of programming. Anyone
can do a VoIP platform that services 5,000 customers. But to be a true
competitor, someone needs to build a platform that can scale and is fully
automated in the back office. I could go to sleep Friday night and wake up
Saturday morning with 25,000 downloads. That would be 25,000 new sign-ups,
dial-tones and phone numbers delivered and credit cards charged, for people
buying our App. That is how automated we are. For new competitors to come in
and do this, they would probably have to go and buy equipment from a VoIP
vendor. However, they would then have scalability issues, and they would be
anchored down by the limitations of their equipment vendor. We do not have
that issue, because we wrote the code ourselves, and we can expand it
however we want. For example, if there is a need for a great deal of video
calling within South Africa, we could install our software on a server
cluster in South Africa, from a laptop in the United States. We can do that
without even traveling to South Africa because we are virtualized. We are in
the cloud. We believe we are far ahead of any entity that would enter this
industry.
CEOCFO: These are exciting times for
Pervasip!
Mr. Riss: We are very excited. We love
the mobile Internet revolution. Our mobile platform gives us a worldwide
revenue-generating engine and we have subscribers in more than 160
countries. We know that not all VoIP is created equal and we are very
pleased with our quality and scalability. Some of the larger VoIP carriers
had to add equipment and build their facilities in a rush, because they were
growing so fast. Therefore, they have more network challenges. In addition,
there is plenty of room for us, because the market is huge. There are
projections in the industry of a billion Android users in just a couple of
years. There are more cell phones in the United States than there are
people.
CEOCFO: Why should potential investors
consider Pervasip today?
Mr. Riss: If I could answer in one word,
I would say, “Instagram”, because Instagram is an App company that sold for
$1 billion to Facebook. They are an App company that one year ago had 13
employees. We are an App company with 10 employees, we own our code, and we
are doing video VoIP. Our video VoIP is not on our App yet, but we plan to
add it to our Android App later this year. If Instagram has a photo App,
imagine how valuable a company would be that has a video App, that makes
video calls over the 3G, 4G and W-F- networks on a global basis.
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